Work Christmas parties and gifts – the tax implications

Work Christmas parties and gifts – the tax implications

It’s definitely the season to deck the halls. Christmas parties, Christmas presents, Kris Kringles, work drinks. They’re all part of this festive time of year and we’re definitely not here to spoil your fun, but did you know there are tax implications for some of this frivolity?

Did you know that Fringe Benefits Tax (FBT) may actually apply to Christmas parties and gifts?

Here’s the basics:

  • The costs of food and drink associated with your Christmas parties are exempt from FBT if they are provided on a working day, on the business premises and consumed by current employees.
  • A Christmas Party may be a minor benefit and exempt if the cost of the party is less than $300 per employee and certain conditions are met.
  • Christmas gifts to employees may be a minor benefit that is an exempt benefit where the value of the gift is less than $300.
  • The cost of providing a Christmas party to your employees is income tax deductible only to the extent that it is subject to FBT.
  • The costs of entertaining clients are not subject to FBT and are not income tax deductible.

Still unsure how you may be affected? See the latest advice on FBT and Christmas parties from the ATO.